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Yes, I believe the engine will have to be running (or at least the ignition key should be in the Run? position, or maybe it will work with the door open, like the seat switch will.
That switch does indeed move the steering wheel in and out (no tilt). It could be that the switch is just dirty or corroded. You might try spraying some contact cleaner (eg, CRC or DeOxit, etc) into the switch and then working the switch 20 or 50 times. Might be all you need.
The seat switches also will often fail and can be brought back to life with the same maintenance as above.
I'd also stongly suggest that you replace ALL of your fuses. Don't test, just replace. After 10 years or so they start to fail intermittently and tend to cause all sorts of electrical gremlins.
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